Demand for more female board members as EU’s patience runs out

Dato:
Mar 08, 2012
|Text: Björn Lindahl, Photo: EU

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EU Commissioner Viviane Reding’s patience has ran out. European companies have failed to improve board room gender equality to a satisfactory degree. The European parliament has already voted to introduce quotas to secure at least 30 percent women board members by 2015 and 40 percent by 2020.

One year ago Viviane Reding asked European companies to promise they would work towards getting at least 40 percent women on their boards. Only 24 companies followed her call, among them cosmetics company Guerlain and luxury goods group LMVH. The rest of the list is less impressive; a Bulgarian export company, Greek fish importer Kallimanis and Spanish business school EADA are hardly European business heavyweights.

40 years to achieve gender equality

There has been no breakthrough for women in 2011.

- A 1.9 percent increase from 2010 means that still only one in seven board members at Europe's top firms is a woman At this rate, it would take more than 40 years to reach a significant gender balance - at least 40 percent of both sexes, says Viviane Reding.

The number of women board room representatives in larger public companies in the EU is only 13.7 percent.

The European Parliament has already decided quotas should be introduced. All that’s needed now is an EU directive. This also means the initiative for improving the gender balance moves from the Nordic region - where Norway already introduced its 40 percent rule in 2008 - to the EU.

Yet since Denmark holds the EU Presidency during the first half of 2012 that country will play a key role in driving the process forward. When EU labour and equality ministers met on 17 February the issue of quotas created the basis for a lively debate.

“I am really happy that the meeting agreed the underrepresentation of women in board rooms is a problem. Everybody thinks this is a challenge we must find a solution to,” said Danish Minister for Gender Equality, Manu Sareen, after the meeting.

Viviane Reding told a post-meeting press conference the most important reason to get more women into board rooms was the clear link between profitability and female representation. She quoted an Ernst and Young survey of Europe’s 290 largest public companies, which showed those with at least one female board member were significantly more profitable than those with no female representation.

"Women mean business"

“Women in top management really mean business. There is no longer anyone challenging these facts. I have seen an evolution of the public debate. One year ago, many companies were still saying that you can’t find women for top jobs and that increasing women’s participation is not an issue,” said Viviane Reding.

“Now no one says this. There is an awareness that women mean business and this is big progress.”

When Viviane Reding presented the latest figures for European female board room representation on the 5th of March, she also invited the public – individual businesses, social partners, interested NGOs and citizens – to comment on what kind of measures the EU should take to tackle the lack of gender diversity in boardrooms. The public consultation will run until 28 May 2012. Following this input, the Commission will take a decision on further action later this year.

One option is to use a new political tool brought in with the Lisbon Treaty. Article 19 of the treaty on the functioning of the EU says the Council, after obtaining the consent of the European Parliament, and ‘acting unanimously’ may ‘take appropriate action to combat discrimination based on sex.’

The crucial word here is "unanimously" which limits what the Commission can do. Several member states are against quotas.

The EU Commission and Parliament cannot demand the harmonisation of individual member states’ legislation, but it may ‘adopt the basic principles of Union incentive measures’.

One such incentive measure could be to draw up a directive which would immediately be implemented in all 27 member states. In that case all countries would have to implement the regulations through their own laws or through collective agreements.

One reason why the Norwegian quota law has been so successful is the fact that it is backed up by real power. Companies which fail to meet the quotas are forcibly dissolved because they no longer fulfill the criteria for being a limited company.

Action within the EU so far:

Spain

Passed legislation in 2007 demanding all companies with more than 250 employees and especially the 35 largest public companies must have at least 40 percent of either sex in board rooms within eight years. Those who fail to meet the demand will not be punished, but the fact will be noted in cases where they compete for state tenders.

FranceIntroduced a new law in January 2011 demanding all public companies and companies with more than 500 employees to have at least 20 percent women in the board room within three years, and 40 percent within six years. New board appointments will not be accepted in companies which fail to meet the demand.

The NetherlandsIntroduced a rule in May 2011 to make sure all companies with more than 250 employees must have at least 30 percent of either sex in the board room by 2016. Failure to do so must be noted in the annual report. A new quota law is expected to be passed in 2016.

Italy Introduced a new quota law in June 2011 saying at least one third of board appointments to state and public companies must be women. The deadline is 2015.

BelgiumIntroduced a law in June 2011 saying at least one third of state and public company board appointments must be women. The deadline for state companies is one year, for larger public companies five years and for small and medium sized companies eight years. If the quota is not filled, the board will not be staffed with new appointments.